The phrase mergers and acquisitions refer to the aspect of corporate strategy, corporate finance, and management dealing with the buying, selling, and combining of different companies that can aid, finance, or help a growing company in a given industry grow rapidly without having to create another business entity. A merger is a tool used by companies for the purpose of expanding their operations often aiming at an increase in their long-term profitability. There are several different types of actions that a company can take when deciding to move forward using mergers and acquisitions. Usually, mergers occur in a consensual (occurring by mutual consent) setting where executives from the target company help those from the purchaser in a due diligence process to ensure that the deal is beneficial to both parties. Acquisitions can also happen through a hostile takeover by purchasing the majority of outstanding shares of a company in the open market against the wishes of the target’s board.
The fusion or absorption of one thing or right into another; generally spoken of a case where one of the subjects is of less dignity or importance than the other. Here the less important ceases to have an independent existence.
Merger of Companies
Companies Ordinance 1984 regulates the procedure for the merger of two companies into one. Section 284 of the Companies Ordinance 1984 describes that a company could be merged/amalgamated into another company if:
- Three-fourths of the creditors or members sanctioned the same. An application for sanction for a merger shall be given to the Court. The Court directs the Company to convene a meeting of creditors or class of creditors or of the member of the Company or class of members in such manner as the Court directs.
- No Court sanctioned the merger unless the Court is satisfied that all material facts relating to the Company such as the latest financial position of the Company, the latest auditor’s report on the accounts of the company, the pendency of any investigation proceedings in relation to the Company and the like.
- A certified copy of the order of the Court shall be filed with the registrar within thirty days otherwise the order would have no effect of merger/amalgamation.
- A copy of such order along with the memorandum of the company issued after the order has been made shall be filed within thirty days with the registrar. A copy of every such order shall be annexed to every copy of the memorandum of the company issued after the order has been made and filed aforesaid.
- If a company makes a default in complying with the requirements, the company and every officer of the company who is knowingly, willfully in default shall be liable to a fine which may extend to 500 rupees for each copy in respect of which default is made.
Khurram Ahmed Saeed
